Utilitarian Economics: Not the Only Ballgame in Town

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While economists should continue to advance their profession as an empirical science, they must never lose sight of their liberal arts roots.

I remember the day very well when my professor’s family visited one of my economics classes. In front of a full lecture hall, the professor asked his son—maybe six years old—to tell the class the purpose of economics. His son took the microphone and replied, “To maximize utility.”

It must have been two minutes before the class stopped laughing. I chuckled, too; it was pretty funny. But there was a somber side to the episode as well: it highlighted a serious deficiency in how economics is taught in contemporary academia. Despite a richly diverse tradition of Western ethical philosophy, including the deontological and natural law schools, among others, academic economists systematically assume a utilitarian normative framework when teaching and conducting research.

Anyone who has taken Econ 1A remembers the distinction between “positive” and “normative” economics. The first refers to the scientific dimension of economics and tries to answer the question, given an economic scenario, “What will happen?” The second refers to the ethical dimension of economics and tries to answer the question, “What should happen?”

What is odd is that, having presented the two branches of economics as equally important in Econ 1A, the Stanford Economics Department goes on to train its majors in advanced empirical techniques while offering nary a single course that focuses on teaching them to think critically about ethics.

Unfortunately this tendency is not particular to the Stanford Economics Department, but seems to be endemic of the broader economics community. As a result, economics Ph.D.s graduate as mathematical wizards but often with scant background in the liberal arts. Lacking the tools to challenge the prevailing wisdom that the aim of economic policy should be to maximize some collective utility function, they internalize this notion and pass it on to the next generation of economics students.

It is worth asking what sparked the cycle; why a utilitarian normative framework became institutionalized in academic economics in the first place. I would identify two causes. First, many of the watershed figures of modern economics, such as John Maynard Keynes and Ludwig von Mises, were steeped in the tradition of Benthamite utilitarianism. As the economics profession drifted from the liberal arts, what had been a conscious, educated decision to embrace utilitarian ethics lapsed into a more passive acceptance of an institutionalized norm.

Perhaps more importantly, a certain kind of utilitarianism is crucial to the proper execution of positive economic research. Economists regularly assume a sort of descriptive utilitarianism as a model for human behavior: individuals act in a way that maximizes their utility given a set of preferences. Even if it is not entirely accurate in reality, the commensurability of all goods under the single proxy good of utility is extremely useful for the building of the quantitative, prescriptive models that constitute positive economic science.

It is vital, however, to distinguish between utilitarianism as a model for human behavior—a positive thesis about how humans in fact tend to behave—and utilitarianism as a system of ethics—a normative thesis about how humans ought to behave.

Academic economists seem to have conflated the two, as if the latter were necessary as a working assumption for the execution of econometric research just as the former. Policy proposals are judged on the basis of whether or not they are “welfare increasing,” meaning whether or not they have a positive impact on a social utility function based on individual subjective preferences.

For the ethical utilitarian, no act can be so heinous as to be wrong if the aggregate of subjective preferences sanctions it, no human right inviolable if ignoring it is seen as “welfare increasing.” How far from the vision of the Founding Fathers who, immersed in the natural law tradition, spoke of inalienable rights!

But as tempting as a critique of utilitarian ethics may be, it is not within the scope of this article. My purpose is not so much to convince the academic establishment that utilitarianism is flawed as to remind them that it is not the only ballgame in town. While economists should continue to advance their profession as an empirical science, they must never lose sight of their liberal arts roots. I am sure I speak even for utilitarians when I say that to have our economic policy-makers trained in ethical reasoning would be (dare I say) welfare increasing for all.

Charlie Capps, Economics ’10, is an officer in Stanford Students for Life and a member of the undergraduate leadership board of the Catholic Community at Stanford.